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The electric vehicle (EV) market has been a hotbed of investor activity, with Tesla Inc (NASDAQ:TSLA) being a prime focus. However, a prominent fund manager has advised against investing in EV stocks and suggested alternative options.
What Happened: Freddie Lait, the Chief Investment Officer at Latitude Investment Management, expressed skepticism about the EV sector during a recent interview with CNBC. He pointed out that despite the significant initial investments, most EV companies are yet to turn a profit. Lait predicted that it would take another three to five years to identify the successful players in the EV industry.
"EVs really took off and captured our mindshare 5, 6, 7 years ago, [but] they're not really successful yet. I think it's still going to another three to five years until we know who the winners in electric vehicles are," Lait said.
He also advised against investing in EV automakers, including Tesla, predicting that the race to develop EVs would be unprofitable for many companies. Instead, Lait recommended focusing on established companies like Ferrari (NYSE:RACE), General Motors Co (NYSE:GM), Volkswagen (OTC:VWAGY), and BMW (OTC:BMWYY).
"We don't own any of the [EV] auto manufacturers and I think the arms race to develop EVs is going to be profitless for a lot of these businesses, including Tesla. So, I would avoid it all, I'm afraid."
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Lait particularly praised Ferrari’s "phenomenal business," citing its recent 17% revenue increase and optimistic outlook for 2024. Despite being renowned for its supercars, Ferrari is planning to launch its first all-electric vehicle in 2025.
Why It Matters: This advice from Lait comes at a time when the EV industry is experiencing significant shifts. Tesla, a key player in the market, has been the subject of concerns about sustainability from industry experts. Additionally, other major EV companies like BYD (OTC:BYDDF) (OTC:BYDDY) have seen a significant drop in sales, raising questions about the industry’s future.
On the other hand, traditional automakers are making significant strides in the EV market. Companies like General Motors have announced ambitious plans to expand their EV production, indicating a potential shift in the industry landscape.
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Image: Nerijus jakimavičius from Pixabay
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